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1
Experiences and Learnings from Power Market Development in South Asia:
Power Trading and Power Exchanges
Rajiv Ratna Panda SARI/EI/IRADe
HAPUA-ASEAN-UNESCAP Workshop on ASEAN Electricity Exchange (AEE): An International Perspective 17-19 April, 2017Hotel JS Luwansa, Jakarta, Indonesia
South Asia: A Snapshot Power Market Structure in South Asian Countries (SACs) Indian Power Sector Power Sector Evolution and Power Trading Development in India Indian Power Market Power Exchange Evolution in India- Key features Power Exchange Products in India Regulation of Power Exchange in India Contribution of power exchanges Key Lessons :Power Market and Exchange Development in India Development of South Asia Regional Regional Power exchange Way forward
South Asia Remains World's Fastest Growing Region. Economic Growth (EG) expected to accelerate to 7.3 percent in 2017 from 7.1 percent in 2016. Home to 1/5 th of world’s population. India is the largest economy in the region and geographically centrally located. Most of the countries are facing power shortages. Demand growth to remain robust due to high EG. Total electricity demand in the region projected to grow at an average rate of *5.2% annually from 2013-2040 period Current Installed capacity is around 363 GW; (India 315 GW) Required installed capacity by 2040 is *1067 GW Cross Border Electricity Trade (CBET) : India, Bhutan is the net exporter and Bangladesh, Nepal net importer of electricity Per capita energy consumption (517 KWh/Capita) is one of the lowest in the world ( World average 2803) Huge untapped hydro potential
South Asia, only 15% of Hydro resources has been developed. Nepal and Bhutan have developed 1% and 5% of their potential. India 29% of their potential.
Low Per Capita: In 1990 per capita was only around 172 KWH/Capita , by 2016 -1075 KWH/Capita . IC 64 GW in 1990 to 350 GW in 2016
High Deficits: In 1997 Energy and peak deficits were 11.51% and 17.97% respectively, by 2016 reduced to 2.1% & 3.2 % only Limited Private Sector (PS) : Share of PS -10% in 2001 to 41 % 2016
63%
27%
10 %
Share of Private Sector -2001
Installed Capacity-State
Installed Capacity-Center
Installed Capacity-Private
34%
25%
43%
Share of Private Sector -2016
Data Source: CEA-Report on Growth of Electricity, other database of CEA
Data Source: CEA-Report on Growth of Electricity, other database of CEA
• Vertically Integrated State Electricity Boards, Planning-CEA, Electricity Supply Act
1975-89
• Central Sector Generation-NTPC (1975), NHPC(1075), NEEPCO (1976), NPCIL (1987);Transmission-PGCIL(1989)
1991-96
• Opening up of Generation Sector, Independent Power Producers, Electricity Supply Act amended (1991), Mega Power Policy (1995), State Reform Acts- 9 states passed State Reform Acts. Unbundling & Privatisation of Orissa SEB (1995) ; followed by HR & AP
1998 • Electricity Regulatory Commission Act; Setting up Independent Regulatory Commission-CERC and SERC
1998-2002
• Electricity Bill Introduced (2001), Report on SEB dues , Privatisation of Delhi, Power Trading Corporation (1999)
2003
• Land Mark EA-2003 Passed; De-licensing Generation, Competition in the Sector, Open Access, Power Trading as Distinctive Activity and Power Market , Independent System Operator,
Post 2003
• Holistic Development of Sector, Competition with Regulatory Oversight (EA, 2003), 2005 -National Electricity Policy , 2006 – National Tariff Policy National Tariff Policy, 2008-Hydropower Policy, R-APDRP, Rural Electrification , NAPCC
Post 2008
• Competitive Power markets, Open Access Regulations (2004,2008) ,Evolution of power exchanges –Different products at PXs
With the Legal Framework mandated under EA Act-2003, Power Trading , Power Exchange Developed – Legal, Regulatory Framework is Important , though Initially friendly Guidelines/Regulation and calibrated approach were adopted to promote Market Development
India’s Power Sector Experience : It’s Relevance towards Integration of Power system for inter-regional energy transfer/exchange and Market Development in Regional Context
Electricity in the Concurrent List
Both Centre and state have power to legislate and Govern, State & Centre's policy, regulation coexist . ( 29 states)
India had different regional grid i.e. different power systems. Complex Structure
Considerable amount of Coordinated harmonization at legal, technical
and regulatory level happened over the years -for increased inter-regional energy transfer /exchange .
South
West
North (NR)
East
Northeast
5 Regional Grids 5 Markets, Five frequencies
East and Northeast
synchronized
South
West
North
East
Northeast
West synchronized
with ER &NER
North synchronized with Central Grid
Central grid
Pre independence - small isolated system, Prior to 60s - State Grids`, During 60s - limited interconnection between neighboring states, late 80s – integrated grid operation through 400kv . Pre 1991-Asynchronous inter regional links; long distance HVDC links /b2b stations
Pre-1991
Dec-2013
August 2006 March 2003
October 1991
One Synchronous Grid – One Frequency
1 3 1 2 2 4 6 8 9 12 13 23
31 35 38 43 46 52 57 59
66 78
84
105
0
20
40
60
80
100
120 Inter Regional Energy Transfer (TRET) in BUs
Integration of Regional Grid played the crucial role for Development of power trading and power exchange.
ER – NER Synch
WE-ER – NER Synch
CR-NR Synch
One Grid
Systematic regional planning, grid integration, coordinated harmonization- 9 BUs in 2002 to 105 BUs of IRET by 2016
Indian Power Sector: Very Complex Institutional structure
Inter-state Intra-state Policy and legislation
Regulation and tariff
determination
Licensing
Central Electricity Regulatory Commission
State Electricity Regulatory Commission Central Electricity Regulatory Commission
State Electricity Regulatory Commission
Generation
Transmission Planning
Transmission
System Operation
Distribution
Trading
Inter State Generating Stations-CGS, Mega
Power Plants , UMPPs
Intra State Generating Stations, Gencos,
IPPs
Inter State Transmission Licensees Intra State Transmission Licensees
Central Transmission Utility
National and Regional Load Despatch Centers(N,E,S,W, NER)
State Load Despatch Centers
SEBs, DISCOM, Distribution Licensees
Inter State Trading Licensee Intra State Trading Licensee
Legi
slat
ion
& R
egu
lati
on
Tr
ansm
issi
on
, Dis
trib
uti
on
, O
per
atio
n
Ministry of Power, Govt. of India
Ministry of Power / Energy / Electricity, State Govt.
Trading Platforms , Power exchanges, - PXs, Bilateral, OTC etc
Plan State Government CEA
State Transmission Utility
Billing Settlements
5- Regional Power Committee, Preparation of Regional Energy and Transmission Accounts.
State Power Committee
Market Platforms
Appellate Tribunal
Trad
ing
Dispute Settlement
CBET Ministry of External Affairs , Ministry of
Power, Designated authority, CERC, POSOCO- Coordination for trans-national exchange /trade of power
SERC, DISCOMs, State Governments Regional Load Despatch Centres RLDCs (Regional system operator) : Apex bodies in regional grid operation; Supervise and control operation of inter-regional and inter-state transmission systems. RLDCs can give directions to intra-state utilities for security of the grid
Coordinated Integrated
System and Market Operation
Decentralized Dispatch Indian Market Design is Based on Decentralized
1.Intra Day 2. Day Ahead Market (DAM) 3.Day Ahead Contingency (DAC) 4.Daily 5. Weekly
Power Market in India
90%
Long Term
Power Purchase
Agreements
Up to 25 Years
Medium Term
Bilateral Transactions Over the Counter(OTC) Licensed Traders (43)
3 Months-5 Years
Short Term
OTC Intraday 3
Months
• Contingency Transaction
• Day Ahead Transaction
• Collective Transaction
• Bilateral Transaction
Power Exchanges
5%
3%
Intraday-3months
Balancing Market
Real Time
Deviation Settlement
Mechanism (DSM)
2%
Competitive Power Market Size of Short Term Power Market
₹ 240 Billion (4.2 Billion US $)
Size of PX Market
₹ 95 Billion (1.59 Billion US
$)
Size of bilateral Trader Market ₹ 145 Billion
(2.43 Billion US $)
Note: 1 US$= 60 ₹ , Data Source: CERC Annual Report on Short-term Power Market in India, 2015-16
1 national Regulator (Central Electricity Regulatory Commission-CERC)
29 state regulators (State Electricity
Regulatory Commission-SERC)
Complex framework :More like a continental Market Structure
66
82
95
99
10
5
99
11
5
76
8
811
87
7
91
2
96
7
1,0
49
1,1
08
8.6%
10.1% 10.8% 10.8% 10.8%
9.4% 10.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
-
300
600
900
1,200
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16
BU
ST Transactions Total Generation
ST as % of Total Generation
ST power market size in FY 2016 was 115.23 BU or 10.4% of total power procured
Short Term Overall volume has grown at CAGR of 27% between FY 2008 and FY 2016 Short Term Includes bilateral trader segment , power exchange segment with transactions, DSM segment, and Direct transactions of electricity between DISCOMs.
Fixation of Trading Margin Regulations; Power Market Regulations: Role of PXs defined and norms for setting up and operating PX, Sharing of Inter-state transmission charges & losses regulations
2008
Need to Create a Common Trading Platform Power
Exchange Guidelines (2007); Power exchanges IEX & PXIL
launched
2005
National Electricity Policy: 15% of new
capacity can be sold outside PPAs to promote
market development; Development of power market by Commissions Tariff Based Competitive
Bidding guidelines - Ministry of Power`,
Trading License Regulations
EA 2003 – recognition of electricity trading as
distinct activity; promotion of
competition & introduction of open
access;
2014
POC Regulations: Transmission
Pricing rationalized
DSM Regulations
2015
CERC Ancillary Services Regulation RE Framework Ancillary Services
Grid Code (1999)
2002
Scheduling : Metering, Accounting & Settlement Availability Based Multi – Part Tariff Imbalance Pricing
IEGC 2006, 2005-06-
Tariff Policy,
Competitive bidding,
Ultra Mega Power
Projects (2005-06)
2006
IEGC 2010 REC
2011
Transmission Pricing (POC)
Scheduling & Dispatch
Congestion Management
Ancillary Services
Imbalances
Four Pillars of Market Design
“Making Competition Work in Electricity” Sally Hunt
Gradual and step by step approach Through Progressive Policy and Regulatory Interventions….., Basic Ingredients were put in place
Multiple Power Exchanges Voluntary participation Nationwide, Online and Electronic platform Auction: Double sided closed bidding** Price Discovery: Uniform pricing-price of the marginal supply
Day-ahead exchange 15 Minute Bids ** Congestion management by market splitting Power exchanges in India is based on the Nord pool market concept* Implementation and regulatory regime for PX customized to Indian Context. Risk Mitigation: PX acts as the counterparty in the trade and absolves the
participants of any risk of payment defaults.
* Restructuring Developments and Issues in Indian Power System, http://searchdl.org/public/journals/2011/IJRTET/5/2/587.pdf
Electricity Transacted through IEX (BUs) Electricity Transacted through PXIL (BUs) Share of IEX
Power Exchanges witnessed growth at a CAGR of 62% (FY-09 to FY 15).
34%
15%
49%
91%
47% 39% 39%
3% 0%
20%
40%
60%
80%
100%
0
200
400
600
800
1000
Switzerland France Germany Nordpool Spot
APX-UK & N2EX
APX- NL Belpex IEX & PXIL
Percentage consumption traded on Exchanges
Total traded (BU) Net electricity consumption (BU) Percentage consumption traded on Exchanges Source: Annual Reports 2014 of all the Power Exchanges and World Energy Statistics, IEA 2014
Source: CERC, Market Report 2016
Source: https://www.iexindia.com/Uploads/Presentation/13_12_2016IEX_DAM_TAM_WEB_Dec'16.pdf The above data are of India Energy Exchange
Key PX Issues raised & Appropriately resolved Prior to setting of PX
National power exchange Vs Many power exchanges:
Multiple power exchange was
allowed
Mandatory Vs Voluntary
participation
The main objective of PX in India was to provide more option to utilities/entities. It was argued ,advantage of Voluntary PX is that impact of price fluctuations, which are not so uncommon in trading through PX will, at
least to some extent, be cushioned by negotiated bilateral trading.*
Double side bidding Vs supply
side bidding
*On the other hand, when supplies to PX are expected to be limited, which is the case in our country, mandatory participation may help in improving liquidity and reduce price fluctuations. It is suggested that participation in the PX could be voluntary, at least to begin with
DBS is more suited for markets where decentralized dispatch is in vogue. (In India, scheduling and dispatch is being done on decentralized basis). In DBS , buyer's demand is sensitive to prices, which is good for
DISCOMs**
**Meeting demand irrespective of the prices may not suit distribution licensees in India, due to poor financial condition of most of the distribution licensees. In any case, load shedding due to shortage of power is not uncommon. Therefore, submitting demand with reference to price appears to be the right choice for PX in India.
Concerns of Licensed Traders
The Licensed Traders concerned about the adverse impact that the establishment of a PX on their business operations.
Initially it was argued to have one PX because of complex city of Coordination with System Operators, Volume of Business etc. but later ;
One PX would be a monopoly and will be complacent in the long run,
Ownership and Management of Power Exchange
No Ownership Condition, FDI is
allowed
The general approach of the CERC is to allow operational freedom to the PX within an overall framework and PX regulation that would be
minimal and restricted to requirements essential for preventing derailment/accidents and collusion. PX in India Private Sector Initiatives
Volume of electricity that could not be cleared as % to Unconstrained Cleared Volume Volume of electricity that could not be cleared due to congestion (BU)
Key Lessons :Power Market and Exchange Development in India
Co-existence of multiple power exchanges: In spite of dominance of one exchange , the presence of more PX offers protection and choice to the exchange trading members.
Indian experience demonstrates , that under the right conditions backed with light-handed regulation in initial years, it is possible to evolve a market even with a complex sector structure. Regulatory Oversight and Monitoring is Crucial.
30
Prospect for Cross Border Electricity Trade (CBET) through Power
Exchange in South Asia
Experiences and lessons learnt from Power Market Development in South Asia/Rajiv Panda/SARI/EI/IRADE
Current CBET Policy and Regulatory Governing Framework
CBET Policy Governing Framework. It is mainly through Bilateral Agreements/MoU between Countries. Trilateral Initiative in near future
India-Bhutan(2006), Framework IG Agreement for joint venture projects. India-Bangladesh
India-Nepal-: 1.Power Exchange Treaty 2. Agreement on electric power trade, cross-border transmission interconnection .... 3. River Treaties
SAARC-Regional Agreement: SAARC Framework Agreement on Energy ( Electricity) Cooperation.
Some Countries have adhoc Regulatory Arrangements. Countries are taking steps on
Regulation , Policy side for CBET . GoI issued CBTE Guidelines. Draft Regulation issued by CERC
Open access, Trading license, Imbalance settlement, Congestion management , Grant of Connectivity etc. exist in India only. Institutional Framework Evolving
Country Current CBET Trading
Arrangements
Type of Transaction i.e.
Negotiated ( G to G ) based on
Negotiation or Market
determined
Bhutan (
Exporter)
India
Chukka, Kurichhu Hydro Projects Negotiated ( G to G )
Tala Hydro Project Negotiated ( G to G )
Dagachhu Hydro Project Commercial
India (Net
Exporter)
Bangladesh
Long-term contract with NVVNL
for 250 MW
Negotiated ( G to G )
Medium-term contract with for
250 MW
Market determined /Commercial
100 MW India-Tripura Negotiated ( G to G )
India( Net
exporter)
Nepal
Bilateral contracts / Treaties to
the tune of 237 MW
Negotiated ( G to G )
200 MW More Market determined /Commercial
Future
Recent GoI Guidelines cover
these features
Trilateral Memorandum of Understanding between Bangladesh, Bhutan and India for Cooperation in the field of Hydroelectric Power had been worked-d out and noted that it would be signed at an occasion when leaders of all three countries would be present together. -India - Bangladesh Joint Statement April 08, 2017
Deepening the bilateral trade, accelerating the implementation of planned projects .
Disseminate the positive benefits of Trade ,making consumer central in CBET argument.
While deepening bilateral trade, recognising the market form of trade- allowing bilateral trade on commercial/market basis.(Out of 2303 MW , 550 MW -commercial/market basis).
Bottom up Approach for Regional Regulatory Framework (RRFs) for CBET & Institutionalisation of CBET process : Coordinated Harmonization through existing mechanism for CBET only, This will make preparation /adoption of regional regulation acceptable easy and acceptable. RRFs are important.
Strong level of operational, system operator, technical/grid code harmonization, Joint Planning , imbalance settlement mechanism via formal/informal Institutionalised process is a prerequisite
Innovative ways to address legal issues, without pursuing long process for amending Laws
Opening up of electricity sector guided by respective national priorities with the aim of promoting competition*, Regulatory & Technical capacity building. Opening of PX for CBET
No preconditions such as sector reform, unbundling etc for CBET, Co-existence of different degree of market reform. Taking steps for trilateral cooperation/trade , sub regional, transit trade (India-Bangladesh-India) Road to Regional full scale Multilateral trade is through bilateral, trilateral and sub regional route. Allowing CBE Trade through Power Exchange( Gradual opening of Products**)
Challenges and Approach for Cross Border Electricity Trade (CBET) in South Asia Regional Power
Market Development in South Asia
Different of policy, legal, and regulatory
mechanisms
Countries are Different stage of
power sector , depth of regulatory framework
Building Strong of transmission system
interconnections;
Developing Regional Electricity
Markets from bilateral markets
Challenges Approach
* SAARC framework agreement for energy cooperation (electricity) **Term Ahead , intraday/contingency Markets are allowed now
33 Bangladesh is in the process of Planning to Import around Apprx. 6000 MW by 2034 (PMSP 2015-JICA Presentation,4th June,2015)
Regional Transmission Interconnection Capacity by 2036 and Development of Cross Border Transmission Infrastructure
East
Bhutan Nepal
Source Data : http://www.cea.nic.in/reports/others/ps/pspa2/ptp.pdf Perspective Transmission Requirements for 2022-36
South
West
North
East
North East
Bangladesh
Bhutan
Pakistan
Additional 36.9 GW Cross Border
Grid Interconnection by 2036
All Fig are in MW
Nepal
Sri Lanka
LEGEND BY 2021-22 BY 2026-27 BY 2031-32 BY 2035-36
0 0
500 1000
Disclaimer : By making any reference to a particular geographic area or by using the term “country’’ and Map in this document, IRADe/USAID does not intend to make any judgement as to the legal or other status of any area/Map. The map used is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries, and to the name of any territory, city or area
1200 MW Capacity Corridor
Approach for Development of Cross Border Transmission Infrastructure & it’s economic
Why Short Term Spot Market ? - Cross Border Electricity Trade through Power Exchange in South Asia: Recent Developments
Source: How Much Could South Asia Benefit from Regional Electricity Cooperation and Trade? World Bank Group policy research working paper 7341, June 2015
The significant diversity of demand among the South Asian countries Non-Coincident Peaks Daily demand variation etc. Variation of seasonal demand provides complementarities and opportunity
of optimal utilization of resources.
These variation are substantial in South Asian region and providing a sizable opportunity for a short-term market and a regional day ahead market.
Government of Nepal and the Government of India signed agreement on electric power trade, cross-border transmission interconnection and grid connectivity which allows power trade through power exchange. (2014)
IEX Petition to CERC for CBET through Power Exchange (2014)
Tata Power Trading Company petition-To allow/enable the to sell the power procured from the Dagachhu Hydro Power Corporation, in Bhutan, through power exchanges (2015).
Both Petition disposed of. Commission has to frame regulations for facilitating
cross border power trade*.
Government of India CBTE guidelines have allowed the trading through power exchange for Term Ahead , intraday/contingency Markets ( Dec,2016).
Draft Regulation by CERC has been issued , public hearing has been conducted( Feb,2017)
Seasonal complementarity– Monthly Electricity Load Profiles across South Asia
Non-Coincident Peaks, Daily demand variation Hydro and Gas
rich Countries can provide Balancing Resources-Helping Renewable Integration
International Experience: Key Messages for Cross Border Electricity through
Exchange –Options for South Asia • Existing power exchanges in one country in the region was graduated to
operate as cross border power exchange. Other countries of the region start joining the exchange (Nord Pool*)
• No existing power exchange in the Region, Countries together Jointly form a Regional Power Pool (SAAP, WAAP) .
• Power exchange exist in various countries of a Region, power exchanges coordinated among themselves through coupling for cross border power exchange (Europe).
• Cross Border Power Exchanges mostly have TSOs, national PXs or market operators as owners.
• In South Asia, India** has two operating power exchanges. In India power exchange are private sector initiative.
* In 1996, A joint Norwegian-Swedish power exchange is established. The exchange is renamed Nord Pool ASA.
Immediate Step
Existing Power exchange of India can
be extended to operate as Cross Border Power
Exchange
Some legal, regulatory changes will be required and some very Basic
Perquisite such as trading as distinct activity, Regional Scheduling
& dispatch, imbalance settlement, open access and regulatory
coordination, some basic technical harmonization etc. to be put in
place. The Business Rules, Bye-laws of PXs needs modifications
Medium/Long Term
South Asian Countries can come together to build a
Regional Power Exchange
If other SA countries have build their own exchange in future,
then the power exchange can come
together to develop a coordinated power
exchange mechanism for cross border trade
of power
Options for South Asia
Scheduling & Dispatch
Congestion Management
Ancillary Services
Imbalances
Four Pillars of Market Design
“Making Competition Work in Electricity” Sally Hunt
Summary: one Existing Liquid Market were extended. In case of no existing market, new Regional Exchange is formed. In case of Existing of Multiple Exchange, coordinated exchange operation .
CTU, STU, System Operator been barred from engaging in the business of Trading in Electricity as per EA Act 2003
However Basic Requirements of trading and power exchange to be put in place such as
Legal , Regulatory changes may be time consuming, a very basic framework in the form of non binding guidelines may be devised and agreed upon for voluntary power exchange based trading in the transition phase until formal Harmonization .
Strong transmission Interconnection infrastructure will be crucial, regional transmission pricing mechanism.
Power Trading as distinct activity. Regional Scheduling & dispatch mechanism and procedures , imbalance
settlement Mechanism Open access in Transmission. Regulatory coordination, Coordinated system planning. Efficient and Independent system operator; rule, process and guidelines for
coordination of trade transactions among system operators.
Political Support at Regional Level is essential for Regional Power Market and Power Exchange Formation.
Coordinated Harmonization of Legal , Regulatory and Policy Framework form the perspective of Cross Border Electricity Trade only. A minimalist approach is advised to be followed from the view of CBET only, But no compromise on transparency, accountability.
Reduction in load shedding with round the clock availability of power from India (500 MW: 5th October, 2013)(100 MW: March 23, 2016 )
Access to Cheaper source of Electricity
The estimated Annual savings would be around Taka 40 billion (US$500 million approx.) (Shahi 2014).
India-Bhutan Interconnection
Bhutan envisages the development of at least 10,000 MW by 2020. 95% of Population Electrified. Close to 75% of all electricity generated is exported to India. Hydropower exports (only surplus) provided more than 40% of Bhutan’s revenues, and constitute 25% of its GDP *. Now it is around average 12.28%. Since 2010. Helps in Sustaining High GDP Growth Rate, Modernization of power infrastructure.
Cross Border Electricity Trade in South Asia and Key Message for ASEAN
65.61 68.45 75.56 95.54
0
50
100
150
1990 2000 2012 2015
Bhutan-Electrcity Acesss (% Population)
Bhutan-Electrcity Acesss (% Population)
2850 3060 3490 4000 4350 5100 5490
6450 6940 7610
0 1000 2000 3000 4000 5000 6000 7000 8000 GNI Per Capita PPP (current international $)
Afghanistan Bangladesh Bhutan India
Myanmar Nepal Pakistan
Emergency Support -During the 2012 blackout in India**
Power Exchange Market Products-- Term Ahead Market (TAM)
Term-Ahead-Market (TAM) provides a range of products allowing participants to buy/sell electricity on a term basis for a duration of up to 11 days ahead.
Products in the Term Ahead Market include Intra-day, Day-Ahead Contingency, Daily and Weekly contracts to help participants manage their electricity portfolio for different durations.
Key features
Trading of Region specific contracts
Firm Delivery: Contracts under Term Ahead Market can be used to ensure delivery of electricity for a few days in advance
Delivery Blocks: • Round the Clock (RTC)
• Day
• Night
• Peak
• Hourly
Risk Management by collection of margins as specified in the Bye-Laws, Rules and Business Rules of the Exchange
Power Exchange Market Products - Day Ahead Contingency (DAC)
Day-Ahead Contingency auction for all the 24 hours, subdivided into hourly contracts.
Allows Sell bids region wise for the first hour of trade followed by Buy bids
Buyers allowed to see price and the region of the Seller but the seller identity will not be revealed. Buyer can bid for any region that is feasible for him.
Auction mechanism is used with Differential pricing
Bids matched are included in the day-ahead schedules • Buy trades settled at or below the quoted price and Sell
trades are settled at or above the quoted price
• There is complete anonymity of the bids between members
• There is a Bilateral contract between Buyers and Sellers.
• Financial settlement and clearing is done by the exchange.
DAC market comes under the Bilateral Transactions.
Scheduling procedure is handled by Nodal RLDC (Buyers region RLDC) in case of DAC
Congestion management through curtailment or re-routing of trade as per the instructions of Nodal RLDC or SLDC
Intra-Day market allows participants to trade electricity for specified hours of the same day. Participants can place bids for each hour or for a block of hours as required
Power procured through Intra-Day allows the market participants to manage contingent spikes in demand and supply unforeseen on a day-ahead basis
This brings the participants much closer to the real time market in an organized way without resorting to UI mechanism
Salient Features of Intra-Day Product:
Allows participants to trade power within the day for delivery starting three hours from the trading
Intra-Day Auction applies for delivery upto 24 hrs of next day
Each contract sub-divided into hourly contracts - 8 time blocks ahead to 24 hr basis on 15 min or multiples thereof
Discriminatory pricing mechanism used as the matching methodology whereby the exchange ensures that the maximum benefit is given to both buyers and sellers
Intra-day market is traded on a bilateral basis with financial settlement and clearance taken care by the Exchange.
Renewable Energy Certificate (REC)
REC mechanism introduced to ease the purchase of renewable energy by the state utilities and obligated entities
REC framework seeks to create a national level market for renewable generators to recover their cost
A generator can generate electricity through renewable resources in any part of the country. For the electricity part, the generator receives the cost equivalent to APPC while the environment attribute is sold through the exchanges at the market determined price
Participation Voluntary / RPO Compliance
REC Denomination 1 MWh
Validity 3 years after issuance
Categories • Solar REC
• Non-Solar REC
Trading Platform Power Exchanges only
Banking Not Allowed
Transfer Type Single transfer only , repeated trade of the same
certificate is not possible
Penalty for Non-compliance Forbearance’ Price (Maximum Price)
Price Guarantee Through ‘Floor’ Price (Minimum Price)
South Asia Regional Power Market Development for CBET
Experiences and lessons learnt from Power Market Development in South Asia/Rajiv Panda/SARI/EI/IRADE
4.97 5.43 5.54
1.94
4.19
4.78 4.69
3.49
1.62
2.79
2.25 1.98 1.98
0
1
2
3
4
5
6
Bunakha HEP(JV)
Chamkhar Chhu HEP
(JV)
Wangchhu HEP (JV)
PHPA I (IG) PHPA II (IG) MHPA (IG) CHP (IG) THP (IG) KHP (IG)
Bhutan- JV-IG Projects Tariffs
1st year Tariff (Nu/INR per kWh) Levellised-Tariff (Nu/INR per kWh)
•Currently most of the Cross Border Electricity Trade projects are backed by government and rightly so as it brings confidence. •Currently trade is facilitated by G2G bilateral agreements, Nodal agencies facilitates the trade. •However looking at the scale of investment required, there is need for market form of development of CBET with Government playing a strong facilitator role. •There is a need to create a Regional Power Market to support these development. •Development of power exchange in India opens up new oppourtinutes for CBET and building Trans Power Exchange
Source: Complied from various sources. Note- Tariff for 1st year for IG projects of PHPA,MHPA,CHP,THP,KHP are not Available
Bhutan-India India-Bangladesh India-Nepal
Principle of
determinati
on
The tariff for both Tala and
Dagachhu PPAs was determined
on a negotiated basis
The tariff for NVVNL PPA is as
per CERC regulations (agreed
based on negotiation). On the
other hand, tariff for PTC PPA
was determined through
competitive bidding
The tariff in both
Treaty/Bilateral arrangement
and PTC PPA was agreed
based negotiation
Note: The phases can alter/vary depending on the policy, regulatory evolution for CBET.
• ST power market size in FY 2016 was 115.23 BU or 10.4% of total power procured
• This was about 16% higher than market in the year 2014-15 (98.99 BU)
• Short Term Overall volume has grown at CAGR of 27% between FY 2008 and FY 2016
• The growth in FY 16 (16.24 BU) mainly on account of positive growth in transactions through power exchanges (5.60 BU) and by direct bilateral transactions between the DISCOMs (8.47 BU)
• The top 5 trading licensees together contribute 72% of the overall trading market volume.
• The top 10 trading licensees together contribute 92% of the overall trading market volume Source: CERC
PTC, 29%
Tata power trading, 13%
Mittal processors,
12% JSW trading, 9%
Manikaran Power, 8%
Others , 28%
Percentage share of Electricity Transacted by Traders in 2015-16
Accelerating Cross Border Electricity Trade and Hydro power Development between Myanmar and South Asia: Opportunities and Challenges/Myanmar/Yangon/16thAugust Rajiv/SARI/EI/IRADe
Energy Overview of South East Asia
Disclaimer: By making any reference to a particular geographic area or by using the term “country’’ and Map in this document, IRADe/USAID does not intend to make any judgement as to the legal or other status of any area/Map. The map used is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries, and to the name of any territory, city or area.
Source: IEA-WEO-2015-Southeast Asia Energy Outlook
Link to South Asia
51
Accelerating Cross Border Electricity Trade and Hydro power Development between Myanmar and South Asia: Opportunities and Challenges/Myanmar/Yangon/16thAugust Rajiv/SARI/EI/IRADe
Potential implications and benefits of enhanced power grid interconnections South East Asia
Disclaimer: By making any reference to a particular geographic area or by using the term “country’’ and Map in this document, IRADe/USAID does not intend to make any judgement as to the legal or other status of any area/Map. The map used is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries, and to the name of any territory, city or area.
Source: IEA-WEO-2015-Southeast Asia Energy Outlook
Link to South Asia
52
Energy Resource in ASEAN/ South East Asia and South Asia
Disclaimer: By making any reference to a particular geographic area or by using the term “country’’ and Map in this document, IRADe/USAID does not intend to make any judgement as to the legal or other status of any area/Map. The map used is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries, and to the name of any territory, city or area.
Source: The 4th ASEAN Energy Outlook
Source: ASEAN RENEWABLE ENERGY DEVELOPMENT 2006-2014
Country
Coal
(million
tons)
Oil
(million
barrels)
Natural Gas
(trillion cubic
feet)
Biomass
(million
tons)
Hydro
(GW)
Afghanistan 440 NA 15 18–27 25
Bhutan 2 0 0 26.6 30
Bangladesh 884 12 8 0.08 0.33
India 90,085 5,700 39 139 150
Maldives 0 0 0 0.06 0
Nepal NA 0 0 27.04 83
Pakistan 17,550 324 33 NA 59
Sri Lanka NA 150 0 12 2
Total 108,961 5,906 95 223 349.33 Source: SAARC Secretariat (2010) for Bangladesh, Bhutan, India, Nepal, Sri Lanka; CWC (2005) for
Indian States and WAPDA (2011) for Pakistan
Renewable Energy Potential in ASEAN
Renewables Afghanistan Bangladesh India Nepal Bhutan Pakistan Sri Lanka Average Solar (kWh/m2/day)
Wind (MW) NA limited 151,918 3,000 4,825 24,000 25,000MW
53
IEX Membership Types and Some Key Statics
IEX: It was promoted by Financial Technologies (India) Limited and PTC India Limited. Other key shareholders include Lanco Infratech Limited, Tata Power Company Limited, Jindal Power Limited, Reliance Infrastructure Limited, Adani Enterprises Limited, Rural Electrification Corporation Limited and Infrastructure Development Finance Company Limited. PXIL: It was promoted by National Stock Exchange of India Limited and National Commodity & Derivatives Exchange Limited. Other key shareholders include GMR Energy Limited, Power Finance Corporation Limited, Gujarat Urja Vikas Nigam Limited, West Bengal State Electricity Distribution Company Limited and Tata Power Trading Company Limited
Proprietary, Trader &
Professional • Right to
trade and clear on its own account
• Generator- Distribution licensees- IPPs - CPP- MPPs –O A consumers
• Exchange Transaction-3p/kWh
Professional Member
• Trade and clear on behalf of its Clients
• Professional members can trade facilitate in trading of clientele but cannot provide financial security
• No credit /financing
• Exchange Transaction-2p/kWh
Electricity Traders
• Trade and clear on behalf of its Clients
• Members are inter-State trading licensees who can trade on behalf of clients
• Credit /financing
• Exchange Transaction-2p/kWh
Clients : Grid Connected , Generator, Distribution licensees, IPPs, CPP, MPP, OA consumers, Trader Client , With valid PPA
IEX Electricity REC
State Utilities
29 States I 5 UTs
16 States I 5 UTs
Generators 379 847
Industrial Consumers
3688 2489
Average Daily Volume
>90,000 MWh Highest : 144,649 MWh
>6 million RECs Highest: 865,675 RECs
IEX Data as on 30 NOVEMBER, 2016 Source: https://www.iexindia.com/Uploads/Presentation/13_12_2016IEX_DAM_TAM_WEB_Dec'16.pdf
54
Nord Pool
World’s first multi-national exchange for trading in power, established in 1993.
Covers Nordic region (Norway, Finland, Sweden, Denmark), Baltic region (Estonia, Latvia, Lithuania), UK and Germany
Provided Day Ahead, Intra Day and balancing products in a voluntary pool. Also supports procurement of reserves.
Also trades in derivatives.
Total physical trade of 489 TWh in 2015
380 trading members
European Energy Exchange – EPEXSPOT
EEX established in 2002, with head quarters in Germany. Runs electricity spot exchange EPEXSPOT.
Covers power spot markets in Germany, Belgium, Netherlands, Austria, France, Switzerland and United Kingdom.
Provides day ahead and intra day markets along with derivatives. Also provides capacity product in the French market.
Total physical trade of 500 TWh in 2015.
OMIE
OMIE manages the wholesale electricity market on the Iberian Peninsula (Spain and Portugal).
It is regulated by the Santiago International Agreement, regarding the implementation of an Iberian electricity market (MIBEL) between the Kingdom of Spain and the Republic of Portugal.
Provides day ahead and intra day markets along with derivatives.
Total physical trade of 259 TWh in 2015.
Have we learned
something form these
for customized adaptation
?
Some of the major power exchanges across the globe
Energy Supply Industry Structure of HAPUA Members Country
Country Utility Serves Market Structure Installed Capacity
(MW)
Brunei Darussala
m
Department of Electrical
Services (DES)
Vertical Integrated Utility (VIU)
827
Cambodia
Electricite Du Cambodge
(EDC)
VIU 732
Indonesia PT PLN (persero)
VIU 40524
Lao PDR Electricite Du Laos
VIU 2978
Malaysia Tenaga Berhad, SESCO
SESB
VIU Penisular Malaysia VIU Serawak State
VIU Sabah
27179
Myanmar Ministry of Electric Power
Transmission and Distribution
Hydro Power Generation
3494
Philippines
National Power
Corporation Trans Co
Power Generation Company
Transmission Company
16924
Singapore
SP Power Grid Gencos, T & D 9951
Thailand EGAT MEA & PEA
Generation, SO & Transmission
Distribution/Retail Supply
34335
Vietnam Electricity of Vietnam
(EVN)
VIU 26926
Experiences and lessons learnt from Power Market Development in South Asia/Rajiv Panda/SARI/EI/IRADE Source: http://aperc.ieej.or.jp/file/2015/8/14/Mr_Syaiful_ASEAN_POWER_MARKET_INTEGRATION.pdf
Source: The 4th ASEAN Energy Outlook
Source: The 4th ASEAN Energy Outlook
0.0
1000.0
2000.0
3000.0
4000.0
5000.0
6000.0
2020 2030 2040
South Asia Electricity Generation (TWh)
Afghanistan
Bangladesh
Bhutan
India
Nepal
Pakistan
Sri Lanka 0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
2020 2030 2040
South Asia Installed Capacity (GW) Afghanistan
Bangladesh
Bhutan
India
Nepal
Pakistan
Sri Lanka
Total
Year Diesel Gas Turbine Hydro Solar Coal Wind Combin e Cycle Biomass Nuclear
Evolving Institutional Framework The Recent MoP CBTE Guidelines and Draft Regulation of Central Electricity Regulatory Commission (Cross Border Trade of
Electricity) Regulations, 2017 gives some indication of the Institutional framework that may evolve which are as follows
Ministry of Power and Ministry of External Affairs CBTE Guidelines and Policy
Central Electricity Regulatory Commission (CERC)
Regulation for facilitating cross border trade of electricity with
neighbouring countries in accordance with these guidelines.
Designated Authority (CEA)
Designated Authority shall coordinate with the nodal agency of the neighbouring country
1) process of approval and laying down the procedure for cross border trade; 2) planning, monitoring and coordinating the commissioning of cross border transmission lines for cross border transactions; 3)
the grid security, safety and operation;
Transmission Planning Agency (TPA) of each neighbouring country
Responsible for Transmission System planning in respective neighbouring country for the purpose of facilitating cross border trade of electricity
Settlement Nodal Agency (SNA) of each neighbouring country
Responsible for settling all charges pertaining to grid operations including operating charges, charges for deviation and other charges
related to transactions
National Load Dispatch Centre (NLDC) Central Transmission Utility (CTU)
Responsible for granting and facilitating short-term open access with respect to cross border trade of electricity between India and its neighboring country. for billing, collection and disbursement of the transmission charges for short
term open access transactions as per CERC (Sharing of Inter State Transmission Charges and Losses) Regulations, 2010 or any other Regulations
57
Key Features of Electricity Act -2003-A Framework for Competition
Creating competition in the industry
Non-discriminatory open access in transmission
Delicensed generation
Single buyer model dispensed.
Ensuring supply of electricity to Provision for open access in distribution to be implemented in phases.
Electricity trading is recognized as a distinct licensed activity.
Development of market (including trading) in electricity made the responsibility of the Regulatory Commission.
Encouraging autonomous regulation with the separation of policy regulation and operational aspects.
Challenges of making competition work in electricity
Physical delivery based market (Min 100kW) - for any/some/all 15 minute time blocks in 24 hours of next day
Electronic: Bid entry, price discovery etc all done through the electronic platform
Prices and quantum of electricity to be traded determined through a double sided closed anonymous auction for each 15-min time block for the following day bidding process.
• Closed: Bids entered cannot be seen by other participants
• Double-sided: Both buyers and sellers enter the price and quantum range they are ready to buy/sell electricity at
• Uniform: Each selected bidder receives the same price (as applicable to its bid area) irrespective of the quoted price for every accepted bid
• Price Discovery: Price is discovered for every 15 min after aggregating the buy and sell request posted at the Exchange using advanced algorithm based on the economic principle of Social Welfare Maximization
Clearance obtained from SLDC by buyers and sellers based on availability of network & ABT meters
Congestion Management through market splitting and determining Area Clearing Price (ACP)
Risk Management through the requisite Margin as specified for the respective trading segment or the type of contracts - Buyers pay in advance (D-1), sellers paid post delivery
NLDC is the Nodal
Power Exchange Market Products: Day Ahead Market (DAM)
operations in around the same time in 2008, have so
far competed with each other in attracting market volumes.
In spite of possibility of dominance of one exchange
over another, the presence of more than one exchange
offers protection and choice to the exchange trading
members.
• Power exchanges as key enablers of market competition
and open access
60% of the total purchase volumes in the two power exchanges in FY
2015-16 was by open access consumers. The open access
consumers in the two exchanges totalled 4177.
• Case for regular monitoring by the Regulating agency
The power exchange operations will need to be regularly monitored by the regulating agency to ensure that consumers’ interests are protected. In spite of well defined regulations, exchange bylaws etc., the market still required special intervention by the Central Regulatory Commission in instances such as:
1. In 2009, exchange prices were capped to 8 Rs./kWh for a period of 45 days to control the high prices (Petition No 178/2009)
2. In 2015, CERC ordered a comprehensive review of the power exchanges, which revealed some violations of the provisions of the Power Market Regulations. (Petition No. 7/SM/2015)* and taking corrective action.
The power exchange operations in India in the last 9 years offer some lessons that similar countries which are planning to introduce power exchanges can consider.
Share of purchase volume of open access consumers in total exchange volume of FY 15-16